LUONGO v. VILLAGE SUPERMARKET, INC.
OPINION. Signed by Judge Kevin McNulty on 6/2/2017. (ld, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civ. No. 17-0659 (KM)(JBC)
VILLAGE SUPERMARKET, INC. and
THE SHOP RITE OF GREATER
The gist of this action is an employee’s hybrid claim under Section 301 of
the Labor Management Relations Act of breach of a collective bargaining
agreement and her union’s duty of fair representation that she was wrongfully
discharged. The defendants filed a motion (ECF no. 4) to dismiss the original
complaint for failure to state a claim upon which relief may be granted. See
Fed. R. Civ. P. 12(b)(6). The plaintiff filed a brief in response (ECF no. 7), but
simultaneously filed a proposed amended complaint. (ECF no. 6) The
defendants then filed a reply brief (ECF no. 8), which was directed to the
allegations of the proposed amended complaint. The Court granted leave to file
the amended complaint and deemed the defendants’ motion to dismiss to be
directed to the amended complaint. (ECF no. 9) The plaintiff, with leave of the
court, filed a surreply. (ECF no. 12) The matter is now fully briefed and ripe for
For the reasons stated herein, the motion will be granted in part and
denied in part. As to Count One of the amended complaint, the motion is
denied; Counts Two and Three of the amended complaint, however, will be
dismissed. The dismissals are without prejudice to the submission of a motion
to file a second amended complaint within 30 days.
The Amended Complaint
The allegations of the amended complaint (ECF no. 6, cited as “AC”),
taken as true for purposes of this motion, are as follows.
Breach of collective bargaining agreement and duty offair
The plaintiff, Lisa Luongo, was employed by defendants Village
Supermarket, Inc., and The Shop Rite of Greater Morristown (together, the
“Company”) for 33 years. The introductory paragraph announces that the
complaint proceeds as a hybrid action against the Company and UFCW Local
1262 (the “Union”), for breach of the duty of fair representation, although the
Union is not named as a defendant.
The collective bargaining agreement (“CBA”) between the Company and
the Union requires just cause for discharge and commits disputes to grievance
and arbitration procedures. On March 14, 2016, Luongo was “verbally”
discharged. On April 15, 2016, Luongo was “formally” discharged. The reason,
she alleges, was that she had eaten a piece of cookie, worth 35 cents, from the
supermarket’s inventory. Other employees routinely did the same, without any
sanction being applied.
On the day of the informal discharge, March 14, 2016, Luongo asked her
union representative, Carmen Pizzi, to file a grievance. On March 22, 2016,
having heard nothing, Luongo through her counsel filed a formal written
grievance. (A copy of the Notice of Grievance and Notice of Intent to Arbitrate is
attached to the amended complaint. (ECF no. 6 at 11)) The Union did not follow
the grievance procedure, investigate, or give Luongo the opportunity to protest
Luongo alleges on information and belief that her complaints of
harassment by a fellow employee gave rise to hostility on the part of both the
Company and the Union. She also states that the Company and the Union also
had an understanding that they would limit the number of grievances pursued.
Breach of contract based on employee manual
Through an Employee Manual disseminated widely to employees, and
long-standing practices and procedures in the workplace, the Company entered
into an implied contract with Luongo. That contract included a commitment to
abide by certain procedures, including the use of corrective action, prior
warnings, and consistency in the application of discipline to employees. The
discharge of Luongo without warning or corrective action breached that
Breach of implied covenant of good faith and fair dealing
By arbitrarily and capriciously singling out Luongo to be terminated for
violation of a policy that had never before been strictly enforced, the Company
breached the implied covenant of good faith and fair dealing inherent in every
contract, including the CBA and the Employee Manual.
Standard on a Motion to Dismiss
Fed. R. Civ. P. 12(b)(6) provides for the dismissal of a complaint, in whole
or in part, if it fails to state a claim upon which relief can be granted. The
moving party bears the burden of showing that no claim has been stated.
Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion
to dismiss, a court must take all allegations in the complaint as true and view
them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.s.
490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140
F.3d 478, 483 (3d Cir. 1998); see also Phillzs v. County of Allegheny, 515 F.3d
224, 231 (3d Cir. 2008) (“reasonable inferences” principle not undermined by
later Supreme Court Twombly case, infra).
Fed. R. Civ. P. 8(a) does not require that a complaint contain detailed
factual allegations. Nevertheless, “a plaintiff’s obligation to provide the
‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and formulaic recitation of the elements of a cause of action will
not do.” Bell Ati. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual
allegations must be sufficient to raise a plaintiff’s right to relief above a
speculative level, such that it is “plausible on its face.” See id. at 570; see also
Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has
“facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a
it asks for more than a sheer possibility.” Iqbal, 556
U.S. at 678 (2009).’
The Court in considering a Rule 12(b)(6) motion is confined to the
allegations of the complaint, with certain exceptions:
“Although phrased in relatively strict terms, we have declined to
interpret this rule narrowly. In deciding motions under Rule
12(b)(6), courts may consider “document[s] integral to or explicitly
relied upon in the complaint,” In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (emphasis in original), or
any “undisputedly authentic document that a defendant attaches
as an exhibit to a motion to dismiss if the plaintiff’s claims are
based on the document,” PBGC v. White Consol. Indus., 998 F.2d
1192, 1196 (3d Cir. 1993).”
In re Asbestos Products Liability Litigation (No. VI), 822 F.3d 125, 134 n.7 (3d
Cir. 2016). See also Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)
(“However, an exception to the general rule is that a ‘document integral to or
explicitly relied upon in the complaint’ may be considered ‘without converting
the motion to dismiss into one for summary judgment.’
(quoting In re
Burlington Coat Factory, 114 F.3d at 1426); Pension Ben. Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
The Company’s reply brief devotes an entire argument point to the proposition
that the plaintiff had provided an “incorrect description of the standard on a motion to
dismiss,” in that she had cited case law predating Twombly and Iqbal. (ECF no. 8, at 8)
The Company’s own moving brief, however, although it cites Twombly and Iqbal, opens
with a quotation of the “no set of facts” standard of Coriley v. Gibson, 355 U.S. 41, 45—
46 (1957). (ECF no. 4-3 at 8) That is the very standard that was rejected, by name, in
Twombly. 550 U.S. at 56 1—63.
A copy of the collective bargaining agreement (“CBA”) is attached to the
Defendants’ reply submission. (ECF no. 8-1) The CBA is integral to and
explicitly relied on by Counts One and Three of the amended complaint. A copy
of the Village Supermarket Associate Handbook (“Employee Handbook”) is
attached to the Defendants’ motion. (ECF no. 4-1) The Employee Handbook is
integral to and explicitly relied on by Counts Two and Three of the amended
complaint. I therefore consider both documents on this Rule 12(b)(6) motion.
Count One asserts a hybrid claim. Such a claim is called “hybrid”
because the employee alleges under Section 301 of the Labor Management
Relations Act (“LMRA”), 29 U.S.C.
§ 185, that the employer breached the CBA,
and also alleges that that the Union breached its duty of fair representation
(“DFR”) by failing to press the employee’s grievance. See, e.g., Jimenez v. GCA
Servs. Grp., Inc., No. CV 16-187 1, 2016 WL 6877738, at *2 (D.N.J. Nov. 21,
2016) (Vazquez, J.). The requisites of such a hybrid
§ 301/DFR action have
been cogently summarized by Judge Walls:
The two claims
are inextricably linked. “To prevail against either
the company or the Union,
[employee-plaintiffs] must not only
show that their discharge was contrary to contract but also carry
the burden of demonstrating a breach of duty by the Union.”
DelCostello v. International Bhd. of Teamsters, 462 U.S. 151, 165,
103 S. Ct. 2281, 2290, 76 L.Ed.2d 476 (1983) (quoting Hines v.
Anchor Motor Freight, Inc., 424 U.S. 554, 570—71, 96 S. Ct. 1048,
1059—60, 47 L.Ed.2d 231 (1976)). This is so because a hybrid suit
is essentially a challenge to private settlements reached pursuant
to collective bargaining agreements. See id.
“A breach of the statutory duty of fair representation occurs
only when a union’s conduct toward a member of the collective
bargaining unit is arbitrary, discriminatory, or in bad faith.” Vaca
v. Sipes, 386 U.S. 171, 190, 87 S. Ct. 903, 916, 17 L.Ed.2d 842
(1967). If a union arbitrarily ignores a meritorious grievance or
“process[es] it in perfunctory fashion,” the Union may be found to
have violated its implied statutory obligation. Id. at 191, 87 S. Ct.
at 917. This does not mean that an employee has an absolute right
to have his grievance taken to arbitration. See id.; see also Fajardo
v. Foodtown Supermarkets, 702 F. Supp. 502, 506 (D.N.J. 1988).
Rather, it means that an employee will have a claim against his
union for “conduct which is so acutely perfunctory that it fails to
attain a basic level of acceptable performance by a collective
bargaining unit.” Rupe v. Spector Freight Systems, Inc., 679 F.2d
685 (7th Cir. 1982).
Pagano v. Bell Atlantic-New Jersey, Inc., 988 F. Supp. 841, 845 (D.N.J. 1997).2
1. Statute of Limitations
Defendants first assert that the hybrid §301 / DFR claim of Count One is
time-barred under the applicable six-month statute of limitations. Id. at 845
(citing DelCostello v. Int’l Bhd. Of Teamsters, 462 U.S. 151, 170—71 (1983)).
The statute of limitations is technically an affirmative defense which
must be pled in an answer. See Fed. R. Civ. P. 8(c)(1). Nevertheless, on a Rule
12(b)(6) motion, a complaint may be dismissed on statute of limitations
grounds, but “only when the statute of limitations defense is apparent on the
face of the complaint.” Wisniewski v. Fisher,
2017 WL 2112308 at *4
(3d Cir. May 16, 2017) (citing Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir.
2014)); see also Fried v. JPMorgan Chase & Co., 850 F.3d 590, 604 (3d Cir.
2017). To be sustainable, such a dismissal must consider the applicability of
tolling doctrines. See Wisniewski, 2017 WL 2112308 at *4 (reversing dismissal
and remanding for consideration of whether time spent in exhausting
administrative remedies tolled the
1983 limitations period).
It is generally the employee’s knowledge of the union’s failure to pursue
the grievance that sets the six-month statute of limitations running:
The limitations period “begins to run ‘when the claimant discovers,
or in the exercise of reasonable diligence should have discovered,
the acts constituting the alleged violation.’” Hersh v. Allen Prods.
The Union is not separately named as a defendant. I interpret the allegation
that the Union breached its duty of fair representation as a necessary component of
Luongo’s hybrid claim against her employer, the Company.
Co., Inc., 789 F.2d 230, 232 (3d Cir.1986) (quoting Metz v. Tootsie
Roll Indus., Inc., 715 F.2d 299, 304 (7th Cir. 1983), cert. denied,
464 U.S. 1070, 104 5. Ct. 976, 79 L.Ed.2d 214 (1984)); see also
Vadino v.A. Valey Engineers, 903 F.2d 253, 260 (3d Cir. 1990). In a
claim charging failure to vigorously prosecute a grievance, this
period commences “when ‘the plaintiff receives notice that the
union will proceed no further with the grievance.” Hersh, 789
F.2d at 232 (quoting Bruch v. United Steelworkers of America, 583
F. Supp. 668, 670 (E.D.Pa. 1984)); see also Vadino, 903 F.2d at
260. The statute of limitations for the claim against the employer is
also “tolled until it was or should have been clear to the employee
that the union would not pursue the grievance.” Vadino, 903 F.2d
Pagano, 988 F. Supp. at 845—46. See also Albright v. Virtue, 273 F.3d 564, 576
(3d Cir. 2001).3
The United States Court of Appeals, reversing summary judgment for an
employer, emphasized that the inquiry is fact-intensive:
This approach has been characterized as “court-inspired
vagueness,” and makes these cases difficult. [quoting Scott v. Local
863, Int’l of Teamsters, 725 F.2d 226, 230 (1984)]. Most notably,
courts are faced with the challenge of determining when the futility
of appeals was or should have become “clear” to the plaintiffs,
thereby triggering the statute of limitations. As noted in Scott, the
futility of further union appeals may not be clear to employee
plaintiffs because “union officials may well be equivocal or
contradictory in their communications to dissatisfied members and
may send such communications through persons within the
internal union hierarchy whose authority to bind the union is at
best hazy.” 725 F.2d at 230 (Becker, J. concurring).
Albright, 273 F.3d at 572.
The amended complaint alleges that Luongo was “verbally terminated” on
March 14, 2016, and requested the same day that her union representative file
Particularly as to a hybrid claim against the employer only, like the one here,
the statute might be considered to run from the employer’s breach of the CBA, rather
than the union’s later failure to pursue the grievance. The Third Circuit has rejected
that approach as unworkable. See Aibright, 273 F.3d at 576 (citing Vadino, 903 F.2d
a grievance. (AC
7, 8) As of March 22, 2016, she had received no response
from the union, and so filed a Notice of Grievance and Notice of Intent to
Arbitrate on her own. (AC
9) On April 15, 2016, she was “formally
10) The original complaint in this action was filed in state
court nearly eight months later, on December 9, 2016. (ECF no. 1 at 2, 7) The
Company asserts that the CBA, article 14(d), requires that the union file a
grievance within ten days after the date of discharge.
The issue of when the plaintiff knew, or should have known, that the
grievance procedure had become hopeless cannot be settled from the face of
the complaint. Albright, considering the summary judgment record compiled by
the parties, concluded that there was an issue of fact: “[Ijt does not appear
from the record that there exists a date certain on which we can say the statute
of limitations began to run; it is not clear that the plaintiffs had ‘notice that the
union w[ould] proceed no further with the grievances.” 273 F.3d at 575
(quoting Hersh, 789 F.2d at 232). Afortiori that is true here, in the context of a
motion to dismiss.
The case cited by the Company, Scott v. Cont’l Airlines, Inc., No. CIV.A.
13-3008 CCC, 2014 WL 345273 (D.N.J. Jan. 30, 2014), is not to the contrary.
There, Judge Cecchi granted a motion to dismiss, but only where it was
undisputed that “Plaintiff received a letter on July 26, 2012 informing her that
the Union decided to withdraw her grievance. (Compl.5.)” Id. at *3• (The letter
was attached to the complaint as an exhibit. Id. at *3 n.3.)
In her surreply, Luongo attaches additional correspondence purporting
to demonstrate that the grievance process went on, and also cites CBA art.
14(a)(4), which grants the union 90 days to notify the employer that it may go
forward to arbitration. I note this, not to drag extrinsic evidence into a Rule
12(b)(6) motion, but to emphasize that the statute of limitations issue may well
depend on such extrinsic facts and issues of contractual interpretation. As
noted above, the statute of limitations is not an element of a claim, but rather
an affirmative defense that the defendant must plead and prove. In a very clear
case, it may provide the basis for a Rule 12(b)(6) dismissal. But the wisdom of
the usual approach—decision of statute of limitations issues on a motion for
summary judgment—is apparent here.
The motion to dismiss Count One on statute of limitations grounds is
2. Exhaustion of remedies
The same reasoning applies to the Company’s argument that Luongo
failed to exhaust the CBA-mandated grievance and arbitration procedures
before bringing suit. The Company asserts that “to maintain a
301 action on
a labor contract, an employee must first exhaust the grievance and arbitration
provisions of a contract.” (Reply Br. at 6—7, quoting Carpenter v. Wawa, Civ.
No. 09-2768, 2009 WL 4756258, at *3 (E.D. Pa. Dec. 3, 2009) (quoting
Koshatka v. Philadelphia Newspapers, Inc., 762 F.2d 329, 334 (3d Cir. 1985)
(citing Republic Steel Corp. v. Maddox, 379 U.S. 650, 652, 85 S. Ct. 614
The complaint, says the Company, alleges exhaustion of remedies only in
conclusory terms. The amended complaint does, however, allege that the
plaintiff attempted to pursue grievance procedures, which were thwarted by the
Union’s inaction. And it alleges that she “has exhausted any internal union
remedies that she could possibly have obtained.” (AC
That is sufficient for purposes of this complaint. The facts surrounding
the grievance procedure can only be established by extrinsic evidence, and
must await summary judgment. The motion to dismiss Count One on
exhaustion grounds is therefore denied.
Breach of Contract (Employee Manual)
Under New Jersey law, a breach of contract claim has three essential
elements: (1) the existence of a valid and enforceable contract, (2) a breach of
that contract, and (3) damages. Murphy v. Implicito, 920 A.2d 678, 689 (N.J.
Super. Ct. App. Div. 2007); accord Frederico v. Home Depot, 507 F.3d 188 (3d
Cir. 2007). As to Count Two, the Defendants argue that the breach of contract
claim founders on the first element: the existence of an enforceable contract.
The Employee Manual, they say, is not a binding contract, and in fact it clearly
and conspicuously disclaims contractual status. The plaintiff does not respond
to this argument. Nevertheless I analyze the point briefly, and find myself in
agreement with the defendants.
“In New Jersey, an employer may fire an employee for good reason, bad
reason, or no reason at all under the employment-at-will doctrine.” Witkowski
v. Thomas J. Lipton, Inc., 136 N.J. 385, 397, 643 A.2d 546, 552 (1994) (citation
omitted). “An employment relationship remains terminable at the will of either
an employer or employee, unless an agreement exists that provides otherwise.”
Id. Such an agreement may be found “if a plaintiff can prove that an
employment manual containing job-security and termination procedures could
reasonably be understood by an employee to create binding duties and
obligations between the employer and its employees.” Id. at 399, 643 A.2d at
533. In such a case, the employment manual is treated as a contract of
employment: “[T]he manual will constitute, in effect, a unilateral offer to
contract that an employee may accept through continued employment.” Id.
(citing Woolley v. Hoffmann-La Roche, Inc., 99 N.J. 284, 309, 491 A.2d 1257,
1270, modified, 101 N.J. 10, 499 A.2d 515 (1985)).
Employers who are wary of creating contractual rights, however, may
protect themselves. Many have included disclaimers in their employment
manuals, and such disclaimers have been found effective. It is well established
that an implied contract based on an employment manual may be negated by
the inclusion of a “clear and prominent” disclaimer. Id. at 400, 643 A.2d at 555
(citing Woolley, 99 N.J. at 285); see also Polonsky v. Verizon Communications
Corp., No. 09—CV—4756, 2011 WL 5869585, at *9 (D.N.J. Nov. 22, 2011);
Nicosia v. Wakefem Food Corp., 136 N.J. 401, 643 A.2d 554, 559—60 (1994). To
be effective, a disclaimer must be “expressed in language such that no one
could reasonably have thought [the manuall was intended to create legally
binding obligations.” Nicosia, 136 N.J. at 413, 643 A.2d at 560 (internal
quotation omitted). “Such a disclaimer serves ‘to provide adequate notice to an
employee that she or he is employed only at will and is subject to termination
without cause.’” Armato v. AT & TMobility LLC, A—2754—1 1T2, 2013 WL
149671 (N.J. Super. Ct. App. Div. Jan.15, 2013) (quoting Nicosia, 136 N.J. at
412, 643 A.2d 554).
The Employee Manual relied upon by Luongo here contains just such a
prominent disclaimer, set off and printed on a single page:
IMPORTANT NOTICE- READ THIS
This Village Super Market, Inc. and Associates Handbook is for your
information only. It is NOT an employment contract. The rules and
policies contained in this handbook may be changed at any time by
Village Super Market, Inc. without prior notice to anyone. The
interpretation of these rules will be solely by the Village Super Market,
Inc. Also, remember that there are many other rules that apply to you
and your job which are not contained in this handbook.
This handbook is not a binding contract. Neither this handbook, nor
anything else you receive in writing from Village Super Market, Inc., nor
anything you are told by someone from Village Super Market, Inc., is a
promise to you of a job with Village. You are not guaranteed that you will
be hired or that you will continue to be employed by Village under any
You may quit Village at any time for any reason, with or without notice.
You may be fired from Village at any time for any reason, with or without
notice. The only exceptions to your right to quit or Vifiage’s right to fire
you at any time for any reason with or without notice would be in the
form of a written agreement such as a collective bargaining agreement.
This notice is important. If you do not understand this notice, you must
ask your Manager for help now. We will be happy to explain anything to
you that you do not understand. Be sure to get help if you need it
because you will be held responsible to understand this notice, as well as
to understand and obey the contents of this handbook.
Employee Handbook at 3.
“When the language and placement of a disclaimer is not disputed, as in
this case, the sufficiency of the disclaimer can be decided as a matter of law.”
Warner v. Fed. Express Corp., 174 F. Supp. 2d 215, 228 (D.N.J.2001) (citations
omitted). See also Darling v. Wegmans Food Markets, Inc., No. CIV. 13-5885
FLW, 2014 WL 4544095, at *5 (D.N.J. Sept. 12, 2014) (“Plaintiffs only response
in her brief as to what additional discovery may be necessary is that Plaintiff
would seek discovery of the company policy manual. But Wegmans has
produced the material documents in this case—namely, the employee
handbook and the policy manual—and Plaintiffs claims can be adjudicated
based on those documents and undisputed facts.”)
Although those cases decided summary judgment motions, they relied on
the face of the manual and the disclaimer; in essence, these courts read the
manual just as an employee would. Here, there is no dispute as to the
genuineness of the Employee Manual, which is cited and relied upon in the
complaint. Particularly in light of the plaintiff’s failure to make any argument
or assertion to the contrary, I find the language of the disclaimer in the
Employee Manual to be sufficiently plain and conspicuous.
As for plainness, as I stated in an earlier case, “the language of the
disclaimer is clear.
The disclaimer does not contain legalese or the kind of
confusing language found to render a disclaimer ineffective in Nicosia, supra.”
Michaels v. BJ’S Wholesale Club, Inc., No. CIV. 2:11-05657 KM, 2014 WL
2805098, at *14 (D.N.J. June 19, 2014), affd., 604 F. Appx 180 (3d Cir. 2015).
The two initial sentences state: “This Village Super Market, Inc. and Associates
Handbook is for your information only. It is NOT an employment contract.” The
first sentence of the second paragraph states: “This handbook is not a binding
contract.” The third paragraph states: “You may be fired from Village at any
time for any reason, with or without notice.” The Notice explicitly informs the
employee that her rights against the Company may be found in the CBA. Twice,
it stresses that the notice is important, and it urges that the employee seek
help if she does not understand it.
As for conspicuousness, as I stated in Michaels, “the disclaimer is
sufficiently prominent. ‘The “prominence” requirement can be met in many
ways. Basically, a disclaimer must be separated from or set off in a way to
attract attention.’ Nicosia, 136 N.J. at 415, 643 A.2d at 561.” 2014 WL
2805098, at *15. This disclaimer has its own entry—the initial entry in fact—in
the Table of Contents. It appears alone, without any other material, on the first
page following the Table of Contents. It bears a title, printed in a large sansserif font that contrasts with the type used in the text of the Handbook:
IMPORTANT NOTICE- READ THIS.
Seemingly no two disclaimers are alike, but this one resembles those
found sufficient in the case law. See, e.g., Darling, 2014 WL 4544095, at *4
(“Each handbook clearly states at the outset that it should not be viewed as a
contract, does not alter the ‘at-will’ status of its employees, and that employees
‘may be terminated at any time, by either party, for any reason or no reason
and with or without notice.’.
Such a disclaimer easily meets the ‘clear and
prominent’ standard articulated in Woolley.”) (citing Wiegand v. Motiva
Enterprises, LLC, 295 F. Supp. 2d 465, 478 (D.N.J. 2003) (finding there was
“no question” that an employer’s disclaimer on an employment manual
precluded the manual from being construed as an employment contract where
the disclaimer stated, “THIS HANDBOOK
DOES NOT CONSTITUTE AN
EMPLOYMENT CONTRACT” and that “THE COMPANY IS
TERMINATE THE EMPLOYEE AT ANY TIME FOR ANY REASON.”)); Lopez v.
Lopez, 997 F. Supp. 2d 256, 277 (D.N.J. 2014) (“Verizon’s Code of Conduct
explicitly states that it is ‘not an employment contract’ and that it does not ‘give
[employee] rights of any kind.’
The disclaimer is located in the introductory
section of the Code of Conduct under the heading ‘Legal Notice.”); Warner v.
Federal Express Corp., 174 F. Supp. 2d 215, 226-27 (D. N.J. 2001) (where
handbook stated, “[tjhe Company wants you to understand that The Federal
Express Employee Handbook should not be considered a contract of
employment,” and other document confirmed that employee “understand[s]
that The Federal Express Employee Handbook contains guidelines only and
that the Company can modify this publication by amending or terminating any
policy, procedure, or employee benefit program at any time,” this language
“ma[de] the employee aware that the provisions of the handbook are only
guidelines and that the handbook does not establish a contract of employment
[or] provide any contractual rights.”).
In short, reading the disclaimer through the eyes of an employee, I find it
clear and prominent, and I hold that it is effective as a matter of law. The
Employee Handbook is not a binding contract, and Count Two (breach of
contract) is dismissed.
Implied covenant of good faith and fair dealing
(Employee Manual and CBA)
Count Three asserts a claim of breach of the implied covenant of good
faith and fair dealing with respect to the Employee Manual. The amended
complaint adds a similar allegation with respect to the CBA.
Under New Jersey law, every contract contains an implied covenant of
good faith and fair dealing. See Sons of Thunder, Inc. v. Borden, Inc., 690 A.2d
575 (N.J. 1997). That implied covenant dictates that a party, even if it does not
breach an express term, cannot act in bad faith to interfere with the other’s
ability to enjoy the fruits of the contract. Wilson v. Amerada Hess Corp., 168
N.J. 236, 244 (2001); see also Brunswick Hills Racquet Club, Inc. v. Route 18
Shopping Ctr. Assocs., 182 N.J. 210, 225, 864 A.2d 387 (2005).
To recover for breach of the implied covenant, a plaintiff must prove that:
(1) a contract exists between the parties; (2) the plaintiff performed under the
That threshold ruling moots questions of contract interpretation. To state a
Woolley breach of contract claim, a plaintiff must point to some language in the
manual that contains “an express or implied promise concerning the terms and
conditions of employment.” See Witkowski, 643 A.2d at 552, Doll v. Port Auth. Trans—
Hudson Corp., 92 F. Supp. 2d 416, 423 (D.N.J. 2000) The amended complaint does
not point to any particular portion of the Employee Manual that guarantees “corrective
action, prior, warning, and consistency in the application of discipline to its
employees.” (AC Count II ¶ 1)
terms of the contract; (3) the defendant acted in bad faith with the purpose of
depriving the plaintiff of rights or benefits under the contract; and (4) the
defendant’s actions caused the plaintiff to sustain damages. TBI Unlimited, LLC
v. Clear Cut Lawn Decisions, LLC, 2014 WL 3853900, at *3 (D.N.J. Aug. 5,
2014) (citing Wade v. Kessler. Inst., 778 A.2d 580, 586 (N.J. Super. Ct. App.
Div. 2001), aff’d as modified, 798 A.2d 1251 (N.J. 2002)); Pactiv Corp. v. Perk
Up, Inc., 2009 WL 2568105, at *12..13 (D.N.J. 2009).
As for the Employee Manual, the Count Three claim of breach cannot
stand. Breach of the implied covenant of good faith and fair dealing is not a
free-standing cause of action; such a covenant is an implied covenant of a
contract. “[Tin the absence of a contract, there can be no breach of an implied
covenant of good faith and fair dealing.” Noye v. Hoffmann-La Roche Inc., 238
N.J. Super. 430, 433, 570 A.2d 12, 14 (App. Div. 1990); accord Obendorfer v.
Gitano Group, 838 F. Supp. 950, 954 (D.N.J. 1993). Here, as I have already
found, the Employee Manual is not a valid and enforceable contract; it contains
no contractual covenants, whether express or implied. To that extent, then,
Count Three is dismissed.
Collective Bargaining Agreement
What remains of Count Three, then, is a claim of breach of the implied
covenant of good faith and fair dealing in relation to the CBA. That state-law
claim cannot be grafted onto the CBA, defendants say, without running afoul of
the broad preemptive effect of federal labor law. The plaintiff has made no
response to this argument.
“Section 301 of the LMRA preempts state law claims that allege violations
of a collective bargaining agreement.” Pagano, 988 F. Supp. at 846—47 (citing
Teamsters v. Lucas Flour Co., 369 U.S. 95, 103—04 (1962)). That preemptive
effect also encompasses any state-law claim that is “substantially dependent
upon analysis” of the terms of a CBA. Allis-Chalmers Corp. v. Lueck, 471 U.S.
202, 220, 105 S. Ct. 1904, 1915 (1985).
Thus courts have repeatedly held that claims of breach of the implied
covenant of good faith and fair dealing within a CBA are preempted by Section
301. See, e.g., Guerrero v. Hovensa LLC, 259 F. App’x 453, 458 (3d Cir. 2007)
(finding preemption because “[w}hether there is an ‘implied contractual duty,’
will necessarily require an analysis of the terms of the CBA to determine if the
contract as a whole obliges the employer to act with good faith and fair
dealing.”); Pagano, 988 F. Supp. at 846; Henderson v. Merck & Co., 998 F.
Supp. 532, 540 (E.D. Pa. 1998) (“[Employee] Henderson’s claim for breach of
the implied covenant of good faith and fair dealing is also completely preempted
§ 301.”) (citing Young v. Anthony’s Fish Grottos, Inc., 830 F.2d 993, 1000
(9th Cir. 1987) (holding that the implied covenant tort is waived where the
collective bargaining agreement contains terms concerning job security); Chmiel
v. Beverly Wilshire Hotel, 873 F.2d 1283 (9th Cir. 1989) (holding breach of
covenant of good faith and fair dealing preempted by
§ 301)). Cf Allis-Chalmers,
471 U.S. at 219, 105 S. Ct. at 1915 (“Since nearly any alleged willful breach of
contract can be restated as a tort claim for breach of a good-faith obligation
under a contract, the arbitrator’s role in every case could be bypassed easily if
§ 301 is not understood to pre-empt such claims.”)
I read Count Three as just such a state-law claim of breach of the
covenant of good faith and fair dealing that is supposedly implicit in the CBA.
As such, it is preempted by Section 301 and must be treated as a Section 301
claim. So viewed, even if it were viable, it would be superfluous. The motion to
dismiss the CBA component of Count Three is therefore granted.
For the foregoing reasons, the defendants’ Rule 12(b)(6) motion (ECF no.
4) to dismiss the complaint, now deemed a motion to dismiss the amended
complaint (ECF no. 6) for failure to state a claim, is GRANTED IN PART AND
DENIED IN PART, as follows:
(a) The motion is granted as to Counts Two and Three of the amended
complaint, which are dismissed.
(b) The motion is denied as to Count One of the amended complaint.
The dismissals of Counts Two and Three are without prejudice to the
submission of a motion to file a second amended complaint within 30 days.
Any such motion must comply with newly-amended Local Rule 15.1.
Dated: June 2, 2017
United States District Judge
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